Can Intel Change Fast Enough?

Intel (INTC) recently announced results for the third quarter ended September 30, 2015. Its total revenue was $14.5 billion, nearly flat year-over-year as compared to $14.6 billion in the third quarter of 2014 and a sequential increase of 10 percent compared to $13.2 billion in the second quarter of 2015. This exceeded the midpoint of the company’s revenue outlook. Going forward, Intel has also provided its fourth quarter revenue outlook to be in the range of $14.3 billion to $15.3 billion, an increase of 2% over the third quarter.

Intel declared third quarter of 2015 net income of $3.1 billion or $0.64 per share, down 6 percent year-over-year compared to $3.3 billion or $0.66 per share during the same period last year and a sequential increase of 15 percent over $2.7 billion or $0.55 per share in the second quarter of 2015.

The integrated digital technology development company reported a slight year-over-year decline in both its top and bottom lines primarily due to the weaker growth of global PC markets.

Product development is a tailwind

The key technology company illustrated 1.5 times year-over-year increase in sales and delivered significant continued improvement in form factor for 2 in 1 technology, considering the fact that 56% of its customers have readily accepted the tablet.

Intel needs to switch fast from the traditional PC culture to the latest tablet and mobile devices trend which particularly depends on cloud and posts a huge growth opportunity for the chip major.

Further, Intel is keen on delivering outstanding shareholder returns in form of dividends and through accelerated share repurchases.

Intel is increasingly driving notable top line growth by significantly extending its product line from fabrication of just the CPU to the development of memory, fabric and silicon photonics and thus enhancing its silicon footprint. Revenue for data center segment of Intel is forecasted to grow at a CAGR of 15% from 2014 till 2018 and including notable revenue contributions from enterprise IT, Government, Academia and science, Cloud SP and Comms SP.

Intel’s expanding silicon footprint through strategic venture into the development of silicon photonics, fabric and memory chips is estimated to drive healthy top line growth for the company which is further supported by significant projected sales for the new mobile devices powered by Intel processors.

Intel is witnessing rising customer traction for its innovative 6th Gen Intel Core processor and it recently launched its advanced 3D XPoint™ technology which is the company’s innovative memory segment in over two decades.

The advanced computing chip manufacturer is keen on offering improved shareholder returns through enhancing its top line growth by launching new computing solutions.

Conclusion

Thus, Intel is making all the right moves in order to tap the growth in the end market. By focusing on mobile products that will gain traction easily, Intel is focusing on the right areas. So, I think an investment in Intel will bear fruit for long-term investors.